Steel giant cuts 1,300 jobs and blames sterling South Wales

Corus, the Anglo-Dutch successor to British Steel, cites the strength of the pound as a major factor in redundancies in Welsh towns

The steel giant Corus described it as a "significant cost and efficiency programme". In seven communities across Wales they were calling it a scandalous, devastating blow.

The steel giant Corus described it as a "significant cost and efficiency programme". In seven communities across Wales they were calling it a scandalous, devastating blow.

Yesterday, the company confirmed that 1,300 steel jobs were to be lost, mainly at Port Talbot, Ebbw Vale and Llanwern, in South Wales. The losses involve compulsory redundancies. Jobs will also go at Trostre, near Llanelli; Shotton in North Wales; Tafarnaubach, near Tredegar, Gwent; Gorseinon, near Swansea; and at a plant in Birmingham.

Corus - created last year by the merger of British Steel and the Dutch firm Hoogovens - blamed the losses on the artificially high value of sterling, saying exports were being hit and the company's position was becoming less competitive.

But unions accused Corus of having a short-term vision and said productivity in Wales was as high as anywhere in Europe. They also said the company was planning to buy a Polish steel plant, with wage bills a fraction of those in the rest of Europe.

Nick Cragg, the managing director of Corus, said the job cuts were "regrettable". "The position of Corus in the UK has been severely affected by the sustained growth of sterling against the euro," he added. "Despite the recent weakening of the pound it remains 15 per cent higher than in January 1999. In a business where we and our customers rely significantly on exports to mainland Europe we have seen our financial position seriously eroded."

A spokesman later confirmed that Corus was negotiating for a 51 per cent share in the rolling operation at a steel plant at Katowice in southern Poland. He said it was impossible to compare Polish and British wages.

Unions fear that there could be even worse news for Wales. Within the next month, Corus will decide whether to reline a blast furnace at Llanwern. If the company decides against spending £35m, most industry observers believe that will lead to closure of the plant - with 3,000 more job losses. Michael Leahy, the general secretary of the Iron and Steel Trades Confederation (ISTC), the industry's biggest union, said the company should reveal its intentions over Llanwern immediately.

"We want the truth now," he said. "Nothing is going to change in the next few weeks. Corus should stop playing with the lives of human beings."

Leaders of all the main unions agreed the company was exploiting relatively weak employment protection laws. The company's 34,000 workers in Britain are said to be considering a campaign of one-day strikes in protest.

Although the job cuts were to some extent expected, yesterday's announcement is a devastating blow to the dependent communities. Managers bore the brunt of steelworkers' anger yesterday, but an increasing number of men were critical of the Government for which they voted.

Tony Blair is no longer a hero. At the ISTC conference a year ago, a video of the Prime Minister was greeted with cheers. Three weeks ago, at this year's assembly, Mr Blair's presentation was met with stony silence. "Labour could be in real trouble come election time," said Mr Leahy.

The Welsh First Secretary, the Labour Rhodri Morgan, is setting up a task force to aid the affected areas. He said the indirect cost to the Welsh Assembly would be millions of pounds, and thousands of other jobs could be affected.

"It is a very, very bad day for Wales," he said. "No one can question the productivity of the Welsh plants - they are as good as anything in Europe."

Port Talbot, a town which grew up because of the sprawling steel works that opened in July 1951 is largely dependant on the plant.

Noel Crowley, leader of Neath and Port Talbot County Borough Council, said: "The problem we have had in Port Talbot is that we have put all our eggs in one basket. So when something goes wrong with Corus then it hits us hard. Unemployment here is above average so this is going to be a very big blow."

In Taibach, another area that prospered through the numbers employed at the works, several men sat drinking in the Taibach Rugby Club, muttering about the area's "terminal decline". Karen Tucker, who owns a cafe on Commercial Road, said: "I've grown up here and lived with the plant. It used to be really busy around here. I am only afraid that it is going to get worse and they'll close the works altogether."

A few doors away, a florist, Allan Lang, who once worked at the blast furnace, shrugged and asked: "What can you do? You never count your chickens around here - you learn to live from week to week. There have been a lot of changes here and these job cuts will not help."

The shifts changed at 2pm yesterday, most workers heading home to their families rather than stopping to talk. "Of course it is disappointing news," said one worker, who asked not to be named. "Everyone has been working really hard to make this plant a success. I don't think anyone can say it is not a success.

"We do feel as though we have been kicked in the teeth. There is nothing we can do about the strength of the pound. They haven't told us exactly who is getting the chop. They say it is too early to say and that doesn't make it any easier for us."